Washington Health Policy Week in Review

Washington Health Policy Week in Review is a weekly newsletter that offers selected stories from the daily newsletter CQ HealthBeat.

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Paper Urges Presidential Candidates to Make Tough Choices on Health Care

By Mary Agnes Carey, CQ HealthBeat Associate Editor

August 10, 2007 -- Candidates for the 2008 presidential election should prepare themselves and voters for the tough choices that must be made to control rising health care costs, urge a panel of political and budget experts in a new paper from the Brookings Institution.

"Presidential candidates will face enormous pressure to look the other way . . . campaign platforms will therefore burst with 'base'-pleasing pledges," the authors write. "If history is a guide, Democrats will tout plans to expand entitlement benefits, not just for those in need, but for middle- and upper middle-income people as well. They will be much less forthcoming about where the money will be found." Republicans will most likely insist that President Bush's tax cuts be made permanent and that more cuts would be even better, and "have little to say about the specific spending cuts that would be needed in order to accommodate the revenue loss."

The paper's authors strongly encourage the 2008 presidential candidates to avoid "politically convenient evasions" and instead embrace "the real choices," which include raising taxes and cutting spending, or confronting how much debt they plan to impose on future generations.

The document is part of Brookings' "Opportunity 08" budget series, which highlights various policy challenges as the 2008 elections approach. The document, written by four experts with plenty of knowledge of budgets and health care—Concord Coalition Co-Chairmen and former Sens. Warren Rudman and Robert Kerrey, as well as Robert Bixby, Concord Coalition's executive director and Peter Peterson, Concord Coalition's president and former Commerce secretary—examines health care in the context of the nation's long-term fiscal outlook.

"The next president will inherit a fiscally lethal combination of changing demographics, rising health care costs and falling national savings," the authors write. "The public should take care not to buy the proposals of presidential candidates that either ignore the magnitude of the long-term fiscal challenge or lock candidates into positions that make the problems insoluble."

Budgetary trouble spots include rising expenditures for Social Security, Medicare, and Medicaid, which will all face pressures as millions of baby boomers begin to retire. Those three programs now constitute 40 percent of the federal budget, and over the next 25 years the number of Americans ages 65 and older is expected to grow from 12 to 20 percent of the population, while the ratio of workers paying taxes to finance Social Security and Medicare relative to the number of beneficiaries will fall by roughly one-third.

Proposals to overhaul Medicare should "cover a level of care commensurate with the care available to working-age people," rather than expecting taxpayers to finance a "high option" insurance plan for all beneficiaries, the authors note. Medicare must operate within the resources available to finance it. "A program that assumes a perpetually open spigot from the Treasury is not fiscally responsible," they wrote. They also urge that Medicare premiums be based on income, with wealthier beneficiaries paying a higher share of their monthly premiums, and that Medicare should include incentives for both patients and health care providers to use resources cost-effectively.

"Political leaders like to pretend that there are simple fixes to Medicare that won't require anyone to give up anything," the authors warn. "Just clamp down on 'fraud and abuse,' or cut back on excessive paperwork, and the problem will be solved . . . The hard truth is that there are only two direct ways to reduce the growth in Medicare costs: pay health care providers less or reduce the amount of health care that patients consume."